Digital downloads are big business. The growth of e-books, downloadable music, mobile phone apps, games and downloadable computer software could make their hard copy equivalents almost redundant in the near future.From a tax point of view, the growth of the sector provides a perfect example of how tax has to adapt to keep up with industry. Currently, VAT on electronic services supplied to consumers within the EU is charged at the rate of the company's location.But this is set to change from 1 January 2015, when it will be charged on the consumer's location - bringing it into line with non-electronic goods and digital downloads from companies outside the EU. Yet this is not without its problems. Unlike normal goods, the location of the consumer is not always immediately obvious, meaning there will be a number of jurisdictions all wanting the revenue for a single purchase.
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